The Shape of the Mortgage Industry in 2018

Oct 5, 2017

You may not be ready for it, but the new year is among us. Recent data provided by Freddie Mac’s Economic and Housing Research Group for 2018 presents a favorable economic environment for housing and mortgage markets pushed along by solid job gains, low mortgage interest rates, and moderate growth for the economy. For the mortgage industry, the research points to three trends for 2018: an increase in purchase business, a slight decrease in refinance transaction, but more consumers tapping into equity as well.

Inventory issues may restrict a larger increase, but Freddie Mac forecasts a 2% growth next year on top of 2017 figures – which have been the highest in roughly 10 years. As home builders continue to pick up speed, the report supports the belief that new construction business will have a lot of heavy lifting to hit the increase forecast.

Digesting the report in terms of refinances looks to be a little tricky. It predicts the refinance share of the overall market will shrink to about 25%, which would be the lowest since 1990. But although activity may be slowed, there looks to be an increase in certain types of refinances. Consumers will be looking to shorten their term (from 30-year to 15-year for example), and moving from an FHA loan (that carries mortgage insurance) to a conventional loan (that does not) will add to monthly savings almost immediately.

Freddie Mac shows homeowner equity at 13.7 trillion in the first quarter of 2017. Rising home prices have more consumers accessing that equity to consolidate debt, pay off student loans, and even begin renovations of the property itself.

This annual report may be a very educated guess, but rates remain the true unknown. With numerous market tools, our Licensed Mortgage Professionals at Homeowners Financial Group have the ability to focus on your unique needs, and are happy to educate you on any mortgage financing needs you may have today, 2018 or beyond.